Beijing police said on Wednesday they have smashed a company that allegedly made and spread fake information on websites for profits, and arrested two men suspected of fabricating online rumors and harming others' reputations.
Yang Xiuyu, founder of the Erma Co, and his employee Qin Zhihui (秦志晖) are suspected of using fake information to attract followers, according to a statement provided by the Beijing Public Security Bureau.
Yang and Qin are being held on suspicion of the crimes of provoking trouble and running an illegal business, police said.
Qin, 30, better known by his online name, Qin Huohuo (秦火火), had alleged on Sina Weibo, China's largest micro-blog site, that the Chinese government had paid 200 million yuan ($32.7 million) in compensation to a foreign passenger after two trains collided in Wenzhou, Zhejiang province, on July 23, 2011.
The micro blog was forwarded about 12,000 times within two hours, creating public anger at the government, police said.
The two also allegedly posted online that Lei Feng, a soldier idolized across China half a century ago for his selfless and modest actions, lived a life of luxury.

Xue, 60, an investor and prolific microblogger with more than 12 million followers, was arrested in the Chaoyang District of Beijing last Friday, police said.
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Investigation found Xue, whose Chinese name was "Xue Biqun" and was verified as "Xue Manzi" in Sina Weibo, China's most popular Twitter-like service, came to China in 2007 and had engaged in licentious activities with more than ten female sex workers since May this year.

Local police in Dangshan county, Anhui Province, on August 29 apologized for inappropriately punishing a Net user who also publicized the wrong death toll in a car accident. The punishment, ruling the man be detained for five days, was called off.
Tong Zhiwei, a professor with the Shanghai-based East China University of Political Science and Law, told the Global Times that the rectification was in accordance with the law and the apology showed that authorities have realized that they should not overdo the crackdown.

On September 2, Xinhua published an editorial entitled "We Must Guard Against the Crackdown on 'Online Rumor's Going Off the Rails" (打击“网络谣言”须防范执行跑偏). Some excerpts:

While we approve of the Dangshan police's attitude of seeking truth from the facts, we must also remind those agencies charged with enforcing the law that that in cracking down on rumors, respect for facts and the law remains paramount.
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It is true that it is somewhat inappropriate for Internet users failing to undertake verification and publish inaccurate casualty figures for a traffic accident. Nevertheless, if there is no evidence indicating that there was malicious intent, then it may not rise to the level of "intentionally fabricating and spreading rumors."
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The original intent of attacking online rumors is good, but we cannot label as rumor every voice we hear that we don't like. We must find a balance between attacking online rumors and protecting the public's rights to know, participate, express, and oversee. We must rely strictly on facts, take the law as our standard, and avoid acting arbitrarily.
Everyone applauds how attacking Internet rumors is conducive to cleansing online spaces and channeling positive energy. But at the same time, we must guard against abusive and deviant implementation in a few places. The path to resolution must first and foremost be built on comprehensive laws and regulations in the relevant areas. And law enforcement in particular must take the lead in abiding by the law. Only then can we build a healthy online environment.

On September 6, 2013, the state sponsored Global Times published an op-ed by Zhang Yiwu (张颐武), a professor of Chinese Studies at Beijing University entitled "Is Chinese Public Opinion Really Constricting?" (中国舆论真的在收紧吗). Some excerpts:

Given today's Internet environment, any move toward social governance will almost inevitably be met with debate and consternation. There is nothing at all odd about this. But the fact is that this does not in any way mean that the development of online opinion in China is being subjected to restrictions. On the contrary, this is a step toward "normalization" of online opinion in China, and it is laying the foundation for a flourishing and dynamic Internet for China.
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First, there is a lack of control over online rumors and malicious behavior which has allowed evildoers to take over, and they are increasingly running rampant. Second, many rumor mongers are using the virtual influence of astroturfers to seize prestige and power, and are employing Big V's reposts to exert influence, building their rants and ulterior motives on a foundation of certain irrational emotional currents in our society, and go on to wantonly attack those with whom they disagree, using rumors and lies to attack others and society. Rumor mongers are generally anonymous, and do not bear any responsibility. Those who repost what they say also avoid responsibility.

On September 5, the state sponsored Southern Weekend published an article entitled "Will Attacking Rumors With the Long Arm of the Law Lead to a World Without Rumors?" (打击谣言的法律边界重拳严打，天下无谣？). As these screenshots show, it was deleted on September 6.

Barring some miracle, two days from now the journalist Liu Hu will spend his 38th birthday in a Beijing jail. On August 23, 2013, a week after reposting a tweet blowing the whistle on a government official, Liu Hu was taken from his home in Chongqing by Beijing police. The detention notice said he was suspected of having committed the offense of provoking and quarreling.
Before Liu Hu, online personality Qin Huohuo was detained, and he was similarly accused of committing the offense of provoking and quarreling.
Since August 20, when police nationwide launched their "Campaign Against Online Organized Crime," the offense of provoking and quarreling has become the new method of attack.
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Southern Weekend's reporters have learned that in the last two to three months, the Supreme People's Court and the Supreme People's Procuratorate have been soliciting opinions from academics on the issue of how the law should be employed in criminal cases where someone uses the Internet to commit offenses such as provoking and quarreling or defamation.
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Liu Hu's two lawyers have expressed their view saying: "There has yet to be a single example of online expression constituting the offense of provoking and quarreling. Such a possibility is excluded by China's criminal law and judicial interpretations."
The Criminal Law provides four ways the offense of provoking and quarreling might be triggered:

Willfully assaulting another person;

Chasing, attacking, insulting, or intimidating another person;

Forcibly taking or demanding or willfully vandalizing or occupying public or private property; or

Making trouble in a public place, creating severe disorder in a public place.

As it relates to Liu Hu's and "Qin Huohuo's" circumstances, only the fourth situation corresponds to online spaces. The question is, do the Criminal Law's public spaces include online spaces?
The most recent judicial interpretation from the "two supremes" only came into effect on July 22, 2013. It clarified the definition of public spaces as: train and bus stations, ports, airports, hospitals, markets, parks, theaters, exhibition halls, sports fields, and other public areas.
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According to a Beijing Daily article, a responsible official with the Beijing Public Security Bureau has said: online spaces are public spaces.
On August 28, Cao Zuohe, a judge at Chaoyang's No. 2 Criminal Court, published an article in the Beijing Daily saying that, the key to whether online rumor mongering constitutes a crime is whether the Internet is defined as a public space. He wrote: "Defining online spaces as public spaces is something recognized by criminal law scholars and represents a breakthrough in judicial practice."
Clearly, relevant government agencies support the proposition that public spaces include online spaces.
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Lin Wei, a professor at China Youth University for Political Sciences, believes that the most recent judicial interpretation from the "two supremes" refers to what are commonly understood as physical spaces, and made no reference to the virtual Internet. From a functional perspective one can say that "online spaces are public spaces," but the problem is that it is not a public space that is mentioned in the Criminal Law.
Che Hao, an associate professor at Beijing University Law School, said that if there is no new judicial interpretation, it would be stretching things use the offense of provoking and quarreling to punish someone for fabricating and spreading rumors.
Zhou Guangquan, a professor at Tsinghua University Law School, provided a new way of thinking about this. He believes that the two concepts of public spaces included in"making trouble in a public place, creating severe disorder in a public place" should be explained separately: "The first concept can include virtual public spaces, because in this kind of space one can make trouble by speaking irresponsibly. However, the second public space must be an 'actual social public space,' and only where an act creates actual social disorder can it be considered a crime."
Zhou Guangquan, Lin Wei, and other criminal law scholars generally believe that the dispute regarding public spaces is not the most important issue.
Zhou Guangquan said that there is no substantive difference between fabricating and spreading rumors online or verbally. The key lies in the consequences that ensue. "Only when an act leads to actual social disorder can it be considered a crime."
Lin Wei believes that, if it is a case of simply misconstruing something, the it shouldn't be subjected to punishment on legal grounds, even where it was done intentionally. If there is to be punishment, it must be because the misconstruing brought about a specific threat to public order, and it must be possible to establish a cause-and-effect relationship between the rumor and the consequence.
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Legal scholars are concerned that, by extending the crime of provoking and quarreling to online spaces we run the risk of making it a "catchall crime," which will create new problems, in particular how to prevent certain leading cadres from utilizing this to exact revenge on whistleblowers where their speech relates to government officials.
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On August 23, a traffic accident occurred in Shangyu, Zhejiang, resulting in seven fatalities. On that day a Mr. Ma posted a rumor on a local forum saying "nine people died," with the result that "within 20 minutes 454 people viewed it and it was reposted 15 times." Police subjected him to five days of administrative detention for "fabricating facts and disrupting public order."
On the evening of August 26, an Internet user in Qinghe county, Hebei province, published information on the local Tieba saying "I heard that a murder took place in Louzhuang, does anyone know what actually happened?" He was detained. According to local media reports, the consequence of this Internet user's action was: This information was quickly clicked on over 1,000 times, was passed around by certain groups in the county, and severely disrupting public order, and causing mass panic.
On August 30, the Yuexiu precinct of the Guangzhou Public Security Bureau reported that an Internet user in Guangzhou had recently fabricated information online, spread rumors, and slandered "The Five Heroes of Langya Mountain." The result was many Internet users reposted and discussed it, which had a negative social impact, so he was subjected to seven days of administrative detention. [N.B. According to other new reports, the Internet user said "The five heroes of Langya Mountain were in fact some 8th Army irregulars, and after fleeing to Langya Mountain they used their guns to suppress local villagers, with the result that the local villagers resented them. Afterwards the villagers told the Japanese army of the five's whereabouts, which led the five to flee down a blind alley." (狼牙山五壮士实际上是几个土八路，当年逃到狼牙山一带后，用手中的枪欺压当地村民，致当地村民不满。后来村民将这5个人的行踪告诉日军，又引导这5个人向绝路方向逃跑。) See: http://epaper.oeeee.com/A/html/2013-08/31/content_1926048.htm]
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Zhou Guangquan believes that, based on his understanding of public places, if an Internet user says something in a virtual public space and it clearly will not give rise to any actual disorder in society and no one takes it seriously, and believes he or she is merely joking, then the law may not punish them.
What the public is questioning the most is where public security agencies proactively intervene in "rumors" about Party and government agencies.
"It is too big of a stretch to say that, if someone blows the whistle on an official the damage caused could extend to shaking public's faith in the governing Party, which could in turn throw society into disorder. Our social order is not as fragile as that."
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As Lin Wei sees it, the Internet users who misreported the number of traffic fatalities should not have been punished. "Even if they did it intentionally, and only three people were killed as opposed to seven as he said, I do not feel that what he said caused any harm."